This article will help you learn about what to do with Turo (formerly RelayRides) income and what deductions and other car-sharing tax benefits are available. Much like Airbnb has disrupted the hotel industry, companies such as Turo and Getaround are attempting to disrupt the car rental business. They have grown tremendously over the past few years. Car owners are offering their vehicles in more and more locations throughout the United States. Often times, renters can save a lot of money by using these services over a traditional rental car company.

Of course, there is a tax impact for renting your car (considered personal property) to others. In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Most car-sharing owners will fit this definition. This means that their income and expenses will be reported on Schedule C (Profit or Loss from Business) and any earnings will be subject to self employment tax.

Starting in 2014, Turo (formerly RelayRides) began issuing Forms 1099-K (as opposed to a Form 1099-MISC) to vehicle owners. This form summarizes the total income you received from Turo for the year. Hopefully, it matches up to your records for the year. You can always verify this by checking your earnings history for your Turo account. The total amount reported on this form will be included as income on your Schedule C.

Your Turo tax deductions will largely be auto expenses. You cannot take the standard mileage rate deduction. Your deductions need to be divided into two categories to simplify the calculation:

1. Allocable expenses. These are your auto expenses in which you will only be allowed a deduction based on your business use of the car. The business use is calculated by taking your total business miles (miles driven by renters) and dividing it by your total miles for the year (which includes business and personal miles). Expenses include insurance, maintenance costs, repairs, registration & license fees, and depreciation (or lease payments). Your allowable deduction would be your total expenses multiplied by your business use percentage.
2. Non-allocable expenses. So long as these expenses are incurred/related to your RelayRides business, you will be able to deduct 100% of these expenses. They include parking fees, cleaning fees, and car washes.

Neither list is all-inclusive, but it should give you a good start on minimizing your taxes. Keep in mind, like any business, you are required to maintain adequate records to support your deductions. Keep those receipts and maintain a written log for mileage driven.